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The real culprit behind the drop in feeder prices

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I don't think you need a Ph.D. To see that cattle feeders are going broke. You can blame whomever but that doesn't change the aforementioned. Not sure where good news is but rising insurance premiums for healthcare doesn't help. Consumers have less to spend on food.

Our country is in sorry shape and most don't even know it yet.
 
WB said:
I don't think you need a Ph.D. To see that cattle feeders are going broke. You can blame whomever but that doesn't change the aforementioned. Not sure where good news is but rising insurance premiums for healthcare doesn't help. Consumers have less to spend on food.

Our country is in sorry shape and most don't even know it yet.
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Yep. And the next guy in line will get the blame if he's even remotely conservative.
 
Largely a load of crap. As WB said cattle feeders have even less market leverage then ranchers selling feeder cattle. The few percentage points increase in fed cattle resulted in a nearly 50% drop in price. For a competitive market place to exist you cannot have things like packer owned captive supply that can kill a market anytime it shows some life.
 
Angus 62 said:
Largely a load of crap. As WB said cattle feeders have even less market leverage then ranchers selling feeder cattle. The few percentage points increase in fed cattle resulted in a nearly 50% drop in price. For a competitive market place to exist you cannot have things like packer owned captive supply that can kill a market anytime it shows some life.
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Why would the packers want to choke their supply of beef? After all, ranchers and farmers own the factory.
Not arguing, just wondering.
 
Thanks for sharing the info, FH. And may the Saints preserve us from believing educated people when they try to correct our self-deduced and/or favorite 'leaders' inflammatory statements about markets and causes for cattle prices dropping!!!!

mrj
 
If you go back over the past year or so you would be hard pressed to find anyone, including educated experts that have monitored the cattle market for years that predicted anything close to the market drop we have experienced. Which would indicate that there are other factors affecting the market. Again most everyone expected a lower market but even the "experts" couldn't foresee what has happened. The things that have been ignored by some groups that are supposed to represent producer interests such as packer concentration, captive supply, lack of a meaningful cash market, etc. are the "chickens" that are coming home to roost now that cattle numbers are starting to rise. It is comical how a few months ago no one could see this coming but now say they "know" why.

There is once again legislative interest in adding some teeth to the Packers and Stockyards Act. Guess what group is taking the packers interest ahead of the producers they say they represent?
 
Faster Horses, when I spoke with our local Tyson buyer a month or so ago he seemed surprised when I thought this would lead to cowherd liquidation. He is a very young guy so I think this downturn is a new thing for him. As for the higher up packer representatives. I don't think they give a care at all if I am still in the business next week, next year or twenty years from now. I really feel as cattle producers we all need to learn how to help ourselves and educate ourselves to what is happening beyond our ranch gate.
 
Maybe producers should unite and have their own packing plant. I don't think that has ever been done, has it? Why not?

As long as we have been in the cattle business, there have been ups and downs. It is that it got so high for a few years, that
now it really hurts. I feel for everyone.
 
Faster horses said:
Maybe producers should unite and have their own packing plant. I don't think that has ever been done, has it? Why not?

As long as we have been in the cattle business, there have been ups and downs. It is that it got so high for a few years, that
now it really hurts. I feel for everyone.
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Some tried in Washington State. It shut down.

I spent 10 years in Food processing. Most Farmer owned ones have the same issue. It needs to be profitable as a stand alone business. Yet, the growers try to see that it is managed simply to "Give" them more money. Also, your plant needs to put out product price competitive in the market if you are making commodity product.

The better examples IMO use well run packing plants to toll process for them and focus on providing great beef calves and marketing.
 
We sell protein, hogs and chicken can out produce us just by the fact sows have litters and hens lay a lot of eggs. We are competing wit them and soy ect. for market share. Hogs have got so cheap it's almost time to start knocking piglets on the head.
We have to make beef an eating experience to sell more beef and not compete on price.
Remember dairy cows produce beef but are a by-product of their industry.
Producers did try to run their own packing plants in Canada during BSE years, I don't think anyone is still running, to much competition for the cattle, huh
 
BMR, couldn't agree more. Remember also that pigs convert better than 3:1 and chickens 2:1 so the cheaper corn gets the bigger advantage they have. Our industry has the fallacy that effiency is the only way to compete in the meat case when in fact the only way we can compete is taste. The ractopamine in our product is hurting us big time. The shakeout from this price drop is going to be felt for a long time.
 
THE REAL CULPRIT.......................



http://www.themarketworks.org/sites/default/files/uploads/charts/Top-30-Beef-Packers-2013.pdf
 
Some years back a local family built their own state of the art packing plant. Some of the family members had very good off the ranch incomes and invested in it. They did custom processing, were starting their own label as well as doing some processing for other small labels. They seemed to be doing quite well. One day a new USDA inspector showed up and within a few months they were shut down. Eventually they ended up having to sell the facility which set idle for quite awhile. I guess it was just a coincidence that the inspector that shut them down previously worked at huge a huge facility owned by one of the major packers.
 
All of the BS regulations have shut down about 90% of the packing plants in Indiana - - - Our run amock Government is going to be the ruin of us all if we don't rein it in!
 
George said:
All of the BS regulations have shut down about 90% of the packing plants in Indiana - - - Our run amock Government is going to be the ruin of us all if we don't rein it in!
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Well George, if you are facing the same culture of runaway government overreach down there as we are here in Canada, then good luck getting it turned around.

These meddlesome bureaucrats are so self-entitled that they look at us as if we are the crazy ones for trying to restore some sense into an insane system of government interference. They operate in a world so far removed from reality that it is sickening.

Every week we are faced with a new set of regulations and/or taxes that suck the life right out of the working man and woman, tying our hands and stifling development like a wet blanket. Then they wonder why business and manufacturing leave the country.

Lately I asked someone if they are familiar with Ayn Rand's "Atlas Shrugged". They said they are - they have the movie and then added that we are living the movie right now. What a horrible reality. I have to wonder what will be left here for my children, now grown, and my grandchildren, still toddlers.

How did this happen? I guess we are just to smile and march on under the New World Order.

And we wonder what lead to the rise of a Donald Trump? Well it was the Hillary culture that led to his rise and she is even worse. People are sick of the same old same old but I don't know how it can ever be changed to a better way of being again.
 
There are many points on this thread giving reasons for problems with production and processing of cattle, and maybe most are correct.

It is easy, and probably more satisfying to us, to blame government excessive regulation and over-reach of governance of everything touching food production as hurting producer prices for cattle. BUT don't we, some of us as much as consumers do, WANT everything to be super safe????

Sure, we can point to businesses which didn't last long processing 'local' beef. Was it over regulation, too few customers willing to pay the true costs, the 'big' outfits leaning on someone? Personally, my take is that it is probably most of the things we blame, to a greater or lesser degree. Do we realize the high costs of disposing of parts of animals not eaten by our 'choosy' US beef customers, even liver isn't a big seller, let alone sweet breads, tripe, and more that require specialized markets and may not fit on the scope of sales of a small processing plant.

Do we need government to decree every detail? Probably not. When SD processing plants have state inspection which is at least equal to, or better than federal requirements, WHY can't our beef processed in them be sold across state lines???? OTH, there really are people in every kind business, no matter how small, who will take short cuts, cheat, tip the scales in their own favor, and we all suffer! So we do need regulation, after all.

Do the 'big packers' REALLY have the time or interest to take the time and effort, payoff, whatever, to put small, local producers that obviously can't compete with the big ones, out of business? I doubt it!

But, I'm pretty sure that equipment and labor costs per animal would be on a prohibitive scale for really small, local based processors. When many people running small businesses of other types in our small towns right up through Rapid City size can't get anyone to fill their jobs existing today, some with good benefits included, and obviously easier work than processing cattle is, I just wonder if it really is pressure from those 'big' outfits keeping new plants from opening and being successful. Are we overlooking the huge costs of processing meat on a small scale being a huge block to small plant success????

Until we get more honest people running for public office for the right reasons, who will clean up what needs it, and all of us do our part, we are not going to get much different results than we are bearing the (rotten!) fruits of right now!

Maybe a good start would be to believe in honesty until facts show us otherwise! And when wrong is proven, take proper action!

mrj
 
I don't see $750 steers leading to anything like liquidation. First, I'd suggest the market top a couple years ago was driven by producers who were first liquidated by drought, then met untenable replacement cow prices. So, they bid up the price of stockers to try to sell some grass. We all sorta knew those prices were unsustainable - they were, and they're gone. Now cheap (relatively) heifers are what they've been waiting for. From Texhoma to Texarcana and 500 miles to the north and south, things look great. And I've seen pasture after pasture of fancy save back heifers (no way have I seen enough cattle to establish data, only an anecdote). These drought removed producers waded into the stocker market and pretty much lost their ass the last several years. Many many of the lenders for these producers ain't lending on stockers, "but cows look look more safe."
Owning cows is definitely more stabil than steers, but their is a counter cyclical relationship between cows and steers. Most producers can raise $750 steers with a reasonable profit, but the southern boys aren't rebuilt yet. Expansion isn't over until the south is repopulated. Then the cowmen can have an old fashioned fight over market share.
 
I am not looking for an argument but I do believe $750 dollar steers will cause some liquidation here in South Dakota. There are some that are paying too much in pasture rent and machinery and add high costs of cow depreciation and they are not going to stay in cow business. One must also factor in the fact that the low is not in yet on the live cattle. It just depends how many of these heifer calves enter feedlot vs the breeding herd. Time will tell.
 
To be contrary to my name, I don't think $750 steers are the problem. The problem is going to be the $600 steer next year. And the $500 steer the year after that. This is when the cow/calf person is going to start to have some problems.
 

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